History’s most diverse, digitally native and eco-conscious generation represents $360 billion in purchasing power, according to new Battery Ventures report
SAN FRANCISCO–(BUSINESS WIRE)–Last year, Gen Zers—born between 1997 and 2012—surpassed millennials to become the most-populous generation on Earth, representing more than 25% of the global population and an estimated $360 billion in purchasing power. But to tap that vast pool of consumer spending, today’s businesses must adapt to Gen Zers’ materially-different preferences and behaviors compared with other generations—and pivot accordingly, according to global, technology-focused investment firm Battery Ventures.
Today, Battery released a comprehensive new report on the preferences and behaviors of Gen Z consumers and the opportunities to serve—and build new consumer-technology businesses around—this digitally native, socially conscious and entrepreneurial generation. The full report, titled “Understanding the Next Generation of Consumers: A Gen Z Snapshot,” is available here. (All material facts below are sourced in the report.)
Investment opportunities exist across a number of key industries to better serve Gen Z, according to Battery. The report found that companies should consider these core themes when creating businesses to serve this groundbreaking generation:
- Values & ethics: Gen Z has a deep belief in ethical and social consciousness. Specifically, 70% of Gen Zers try to purchase from companies they consider ethical, and 90% believe companies must act on social and environmental issues. It showcases a generation that demands ethical behavior from businesses.
- Entrepreneurial spirit: These consumers have a notable entrepreneurial inclination with 62% of Gen Zers stating they have started or intend to start their own business. This showcases their drive and ambition.
- Health & well-being: Mental health is a priority; 37% of Gen Zers have received treatment from a mental-health professional. This group’s pronounced use of fitness trackers (70%) points towards a holistic–and technology-enhanced–approach to well-being.
- Hybrid/remote work preference: This generation shows a strong inclination toward a changed work landscape, with 85% of Gen Zers preferring hybrid or remote work. It underscores the evolving nature of the professional world.
- Digitally native: Gen Z is distinct as the first truly “digitally native” generation. Immersed in digital tools, entertainment and communication their entire lives, Gen Zers are intensely tech-forward, a trend we expect to persist with the advent of new technologies.
- Role of social media: Platforms like TikTok, Instagram and more have taken center stage in the lives of this generation. 97% of Gen Zers use these platforms for shopping, a powerful shift in consumer retail behavior.
- Diversity: As the most-diverse generation in terms of race, ethnicity and sexuality, Gen Zers’ focus on inclusivity, representation and individuality–and expectation that brands reflect their values–should be a major consideration for businesses.
“We are thrilled to unveil our Gen Z Snapshot report, which explores the behavior of this rising generation and offers key takeaways for founders and business leaders who seek to capitalize on the consumer shifts these young people are driving,” said Roger Lee, a general partner at Battery focused on consumer technology and co-author of the report. “It is critically important that businesses at all stages appreciate the unique attributes of Gen Z consumers, as failing to do so could result in diminishing relevance and visibility in the market.”
Portrait of a Generation
Over the past decade, the software industry saw an accelerated shift to mobile content consumption, device usage and the development and monetization of social media platforms, coinciding with the maturation of millennials. However, with Gen Zers surpassing millennials’ population share, these young consumers—now 11 to 26 years old—will soon exert a more dominant role in shaping cross-industry trends.
The Battery Ventures Gen Z Snapshot report explores how Gen Zers—the most-educated generation to date, and the most-diverse in terms of race, ethnicity and sexuality—celebrate individuality, authenticity and inclusivity. Recognizing and embracing these deeply ingrained values, along with Gen Z’s heightened awareness of social and environmental matters, holds significant implications for today’s business leaders. This generation not only desires but expects the brands they choose to align with their ideals: In fact, 90% of Gen Zers believe companies must take action on social and environmental issues, per the report.
As the first truly “digitally native” generation, Gen Z has embedded technology solutions, including generative AI, into work, school, socialization, health and wellness and every other area of life. Industry analysts predict that 53% of Gen Zers will be monthly generative-AI users by 2025, likely leveraging these technologies for search and discovery, education, work and entertainment, among other applications.
In selling to Gen Zers, businesses must meet these young consumers where they are—online—by using popular social media platforms to cultivate trust and brand visibility. Gen Zers are also eager to use their digital savvy in their professional lives – 85% prefer hybrid or remote to in-office work. Many are interested in charting their own career paths, either by pursuing entrepreneurship, as 62% of Gen Zers have indicated they have started or intend to start their own business.
“Every generation of consumers makes its mark across industries with unique preferences and behaviors. Nevertheless, we feel that Gen Z is poised to be one of the most-influential generations in history, with a distinct—and deeply principled—consumer perspective, coupled with a global platform through social media,” added Courtney Chow, a vice president at Battery and co-author of the report. “We are excited by the potential of new technologies like generative AI, as well as marketplaces that enable re-commerce, freelance work, mental-health access and more, to appeal to Gen Zers, who have never known a world without the Internet and view digital tools as integral to every aspect of life.”
To see the full report, please visit: https://www.battery.com/blog/2023-gen-z-snapshot/.
About Battery Ventures
Battery partners with exceptional founders and management teams developing category-defining businesses in markets including software and services, enterprise infrastructure, consumer tech, healthcare IT and industrial technology and life-science tools. Founded in 1983, the firm backs companies at all stages, ranging from seed and early to growth and buyout, and invests globally from offices in Boston, San Francisco, Menlo Park, New York, London and Tel Aviv. Follow the firm on Twitter @BatteryVentures, visit our website at www.battery.com and find a full list of Battery’s portfolio companies here.